In 1906, Dernburg entered politics as Prussian Representative at the Federal Council. In 1907, he was appointed Secretary of State for Colonial Affairs and head of the Imperial Colonial Office. As Secretary, he pursued a reformist course in German colonial policy.

When the government of Chancellor Bernhard von Bülow collapsed in 1910, Dernburg resigned his seat in the cabinet. During 1914 and 1915, while Germany was at war with Britain but the USA was still neutral, Dernburg was based in the United States and represented German viewpoints in the propaganda campaign against Britain.[1]